4G World: The Future of NFC

In a lot of ways, the speakers at the NFC Summit at 4G World made it sound like Near Field Communications (NFC), in spite of its potential, has had a lot of trouble. It’s been stuck in development, they said. It’s struggling to be adopted, they said. They pointed to how the technology has progressed — or rather, hasn’t progressed — thus far.

“We wanted to kick-start the NFC ecosystem and its adoption. It was stuck in that ‘it’s happening next year’ phase for the last 10 years,” said Osama Bedier, vice president of Wallet and Payments at Google, of the recently-launched Google Wallet app. “Our goal was to help consumers not just find things, but also to help them buy things. We don’t expect the world to move to NFC next year, but we want to do is test, learn, and iterate.”

But despite the previously bleak state of the technology, Bedier and the other speakers present still recognized that NFC has a massive amount of potential applications, and that the technology goes way beyond being able to pay for things with a tap of your phone. In fact, they said, going beyond mobile payments is exactly what needs to happen if NFC is to have a fighting chance.

“NFC is a solution looking for a problem,” said Hank Chavers of the consulting group Constratus. “Think about how many innovations have started like this.”

Bedier shared similar sentiments, claiming that the potential of NFC is just waiting to be unlocked in a massive way. “We haven’t found that killer app yet that will drive the adoption of NFC,” said Bedier. “Payments is not the NFC killer app. It’s stagnating and holding back the industry and causing lots of in-fighting. Partners need to co-invest.” It was for this reason, he said, that the recently-launched Google Wallet app started with something broader than payments, including the ability to store gift cards, loyalty cards, and coupons.

It won’t happen overnight though, like he said. “Habit is hard to overcome,” said Bedier, giving the example that credit card companies didn’t just drop their innovation on the world. They had to be adopted over time and users had to be enticed to use them over cash. “So it’s about the experience. What would compel people to use this?”

He suggested an ideal day in which a person on a business trip could use NFC to board their plane, redeem rewards points for amenities on the flight, pay in the cab, check in at their hotel, unlock the door to their room and even access their rental car. “People don’t care what it’s called. What we learned [with Google Wallet] is that these ‘magical experiences’ drive usage,” Bedier said.

“We got it started by putting credit cards in there,” he said, “but we’re hoping that it will move onto much more than that.” He named employee badges, punch cards, student IDs, keys, and more as some of the ways in which NFC can be truly realized. “Stitching the experiences together is what’s important.”

Chavers seemed to be on the same page as Bedier. “NFC is about uniting our physical and virtual worlds,” he said. “How do we unify these? How do we unify the desire to reach out and touch with the desire to experience everything?” He pointed to information gathering as one possible use for NFC, including smart posters (which have a receiver chip in them so people can tap their phones on them and get a link to more information, download media, etc.) and location and time recording (tapping your phone somewhere to record where you were and at what date and time).

“And there’s also the concept of information exchange that poses a great opportunity for NFC,” Chavers said. You can use it to establish a “rapid and intuitive connection,” the most obvious examples being Bluetooth and Wi-Fi handoffs, he said. It can also be used to verify assets, labeling, and producer authentication, he said, putting it in the context of verifying whether or not a piece of high-end clothing is genuine.

“Companies can attach an NFC tag to prove that it’s a valid piece of cloth and not just some knockoff,” he said.

These are applications, however, that have either been thought of or already exist to some extent. But then he started to get more imaginative, suggesting that NFC could make its way into meters and gauges (that are connected and ready for diagnosis), as well as breathalyzers and even glucose meters. Imagine being able to use your glucose meter, which has an NFC chip in it, and being able to send the reading straight to your doctor, he said.

“But the big difference in the usages of NFC is in context. Why am I tapping?” said Chavers. “Context here is crucial. If I’m tapping my phone on a map, is it outside a school or in a tourist office? If you’re tapping it on a subway map, for example, it’s probably because you want to see when the next train is coming.

“People desire to tailor their phones and their environment,” he continued. “NFC provides the link to bring these together; a link between virtual and physical environments. It’s time to let your imagination loose.”

And it appears that many already have, or at least intend to. Bedier pointed at the projected growth of NFC, which is expected to present in 863 million devices by 2015 (up from 50 million in 2011). “The devices are coming,” he said. “And we need to focus on the experience. It’s on us as an industry to collaborate and focus on those magical experiences and figure out how to get them noticed.”

Koichi Tagawa of the NFC Forum, who called NFC a “horizontal technology,” had a similar vision.

“In Japan, for example, we can use the NFC tech to make payments,” he said. “My wife says, ‘that’s great, but where are the places where I can use it?’ and I have to pull up a map to show her. In reality, we need to have more places where NFC can be used. If anything, just to satisfy my wife.

“We need to have too many places where NFC is being used to show on a map,” he said. “That day has to come.”

Tagawa went on to offer slightly more abstract (and business-oriented) ways than Bedier and Chavers in which the NFC Forum intends to help promote the growth of NFC. He pointed out that flexible and stable specifications for NFC usage are necessary, and that that’s a step that the NFC Forum has already taken; they finished specification development for the technology in 2010.

“Next, we need a compliance program that delivers on the NFC brand promise of compliance and interoperability,” he said, and pointed to the NFC Forum certification mark (pictured left) which could be used as a seal of approval on NFC-ready devices.

But most importantly, he stressed, OEMs and others need to build up the ecosystem for NFC, which, in turn, means building up the different ecosystems for all of its different applications (think cars, retail, public transportation, medicine, etc.). “We need to encourage the ecosystems to work together so we can deploy NFC better,” he said. “So outreach is critical.”

So Tagawa suggested activities to help with that outreach and expand opportunities. “We need to provide formal opportunities for members to share business developments at face to face meetings,” he said. “We need to encourage innovation, and use things like Twitter, event partnerships, and spotlight events for developers.” He even praised the use of white papers, which he claims are the most popular deliverable that the NFC Forum currently offers.

But for all of the NFC Forum’s achievements in outreach, success is still not guaranteed for NFC, of which Bedier reminded us when he wrapped up his presentation with a warning of sorts. If we don’t work together to help promote the proliferation of NFC, he said, it will fail.

“When it comes to driving adoption [of NFC], coexistence and ‘coopetition’ is important,” said Bedier. “If every credit card only worked with their own terminal, if every bank had their own payment standard, none of them would be successful. There’s a reason your ATM card works at all ATMs. It’s valuable for all of us.

“If we don’t get this right,” he said, “the whole space will be unsuccessful.”